Indonesia more exposed to capital flight than Malaysia: S&P

Kuala Lumpur

ROCKED by a political scandal and falling oil prices, Malaysia has been dominating headlines in recent months as the ringgit leads a drop in Asian currencies. That's taken the spotlight off the economy of neighbouring Indonesia, which Standard & Poor's (S&P) says is more exposed to capital flight.

"The thing about Malaysia is that the capital market is deeper there, so there's less reliance on foreign capital among corporates or banks to fund their growth," said Kyran Curry, S&P's director of sovereign ratings in Singapore. "Indonesia is much more vulnerable to shifts in outflows and inflows. We're worried about Indonesia's foreign-exchange reserves."

Bank Indonesia's reserves have fallen almost 9 per cent in the six months though August. While that's less than in Malaysia, Mr Curry says he's concerned as the monetary authority in Jakarta has recently been "spending a lot to stabiliz…